Prevention of Money Laundering Act, 2002
The PMLA and Other Laws
The PMLA never operates alone. Its predicate offences come from the BNS and a long list of special laws; its procedure and evidence from the BNSS and BSA; and its attachments collide with the claims of banks under SARFAESI, creditors under the IBC, and the tax, customs and benami authorities. This note maps the PMLA's relationship with fifteen other laws, and explains how Section 71 is reconciled with other non-obstante clauses.
A heat map of the PMLA's interaction with fifteen other laws
1. The Criminal Codes
Law | Relationship |
|---|---|
BNSS, 2023 | Applies to PMLA proceedings so far as not inconsistent (s. 65, s. 46); pre-cognizance hearing under s. 223 (Kushal Kumar Agarwal, 2025; Parvinder Singh, 2026); undertrial release under s. 479; remand under the successor to s. 167; written grounds of arrest (Mihir Rajesh Shah, 2025) |
BSA, 2023 | Governs evidence: the confession bar in s. 23 does not reach ED officers (not police), save for statements in custody of the same agency (Prem Prakash, 2024); s. 63 certificate for secondary electronic records |
BNS, 2023 | Penal Code entries in the Schedule are read as references to the corresponding BNS provisions; conspiracy is scheduled only where aimed at a scheduled offence (Pavana Dibbur, 2023) |
2. Predicate Statutes
Law | Relationship |
|---|---|
Prevention of Corruption Act | Its offences are scheduled; bribes and disproportionate assets derived from corruption are classic proceeds |
NDPS Act | Its offences are scheduled in paragraph 2 of Part A; laundering of NDPS proceeds carries up to ten years under the proviso to s. 4 |
UAPA | Terrorism and terror-funding offences are scheduled; funds for terrorism may be attached |
Customs Act | s. 135 (evasion) in Part A; s. 132 (false declaration) in Part B above one crore rupees |
IT Act, 2000 | Certain cyber offences are scheduled; cyber fraud proceeds are pursued under the PMLA |
Companies Act, 2013 | Fraud under s. 447 is scheduled; the significant beneficial owner register assists investigations; companies are liable under s. 70 |
3. Parallel Economic Laws
Law | Relationship |
|---|---|
FEMA, 1999 | Civil regime for foreign exchange contraventions, also enforced by the ED; FEMA contraventions are not scheduled offences, so FEMA proceedings do not by themselves found a PMLA case |
Income-tax law | Tax evasion under the Income-tax law is not itself a scheduled offence; the Black Money Act offence is; income-tax findings may be shared and used |
GST law | GST offences are not scheduled as such; information may be shared, including with the GST Network after 2023 |
Benami law | The Benami Transactions (Prohibition) Act permits confiscation of benami property; the same asset may face both regimes; the Supreme Court's 2022 judgment on the 2016 amendment in Ganpati Dealcom was recalled on review in 2024 |
§ PMLA against FEMA Nature. PMLA is criminal and punitive; FEMA is civil, with penalties. Trigger. PMLA needs proceeds of a scheduled offence; FEMA needs a contravention of foreign exchange rules. Overlap. Hawala and cross-border transfers may attract both; the ED may run both proceedings, but a FEMA contravention alone is not a PMLA case. |
4. Insolvency and Recovery Laws
Issue | The position |
|---|---|
IBC s. 32A | On approval of a resolution plan resulting in a change of management to persons unconnected with the offence, the corporate debtor's liability for prior offences ceases and its property covered by the plan is freed from attachment; upheld in Manish Kumar v. Union of India, (2021) 5 SCC 1 |
Resolution applicant | Takes the assets free from PMLA attachment for prior offences under s. 32A; individuals remain liable |
PMLA attachment and IBC moratorium | Courts have treated PMLA attachment and the moratorium as operating in different fields; after s. 32A, the approval of a qualifying plan is decisive for the corporate debtor's assets |
SARFAESI Act | Secured creditors' enforcement may collide with attachment; bona fide prior security interests are weighed, and restoration under s. 8(8) is available (see the next topic) |
Rights of secured creditors | Protected in adjudication and through restoration, particularly where the security predates the criminal activity |
5. Section 71 against Other Non-Obstante Clauses
§ How courts reconcile them • Genuine conflict first. A conflict exists only if both laws cannot operate together. • Field and purpose. The PMLA's field is proceeds of crime; recovery and insolvency laws deal with debts and the revival of companies. • Later and specific law. Where Parliament addresses the conflict directly, as in IBC s. 32A, that provision governs. • No benefit to the launderer. Whatever the outcome between the State and creditors, the offender does not keep the proceeds. |
6. Frequently Asked Questions
Does the BNSS apply to PMLA cases?
Yes, so far as not inconsistent with the PMLA, under Sections 46 and 65; it supplies, among other things, the pre-cognizance hearing and undertrial release.
Is a FEMA violation a scheduled offence?
No. FEMA is a civil regime; a FEMA contravention alone does not found a PMLA case.
What does IBC Section 32A do?
It frees the corporate debtor and its assets covered by an approved resolution plan from liability and attachment for prior offences, where management passes to persons unconnected with the offence.